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Pidilite Industries
4QFY12: Margin higher despite rising raw material prices; Buy
Pidilite reported strong results in 4QFY12. Its revenue and net profit
grew 14% and 43%, respectively. EBITDA margin increased 70bps
despite higher raw material prices. The company has not yet finalized
plans for the elastomer project. With various launches planned, we
expect steady growth in FY13 and retain a Buy, with a target of `196.
Healthy revenue growth. Pidilite grew revenues 14% yoy. In the past
four quarters, it has hiked prices 5-6%. 4QFY12 volume growth came in
at 8%-9%. Revenue in consumer and bazaar products grew 18.1% and in
industrial products 4%. Pidilite has indicated that it would further hike
prices, by end-Jun’12.
EBITDA margin improves, tax rate drops. The EBITDA margin
improved 70bps yoy, due to lower ‘other expenditure’ and despite higher
raw material prices. The impact of the rupee depreciation will be seen in
1HFY13. The effective tax rate was down 410bps and ‘other income’ was
up ~52%. This helped the company report 43% yoy net profit growth.
Status maintained on the elastomer project. The company mentioned
that the status of the elastomer project has been unchanged and it has not
yet finalized plans regarding this project. However, it indicated that there
are no further investments in this project apart from some expenses to
keep the plant in running condition.
Product launches continue. There has been a steady flow of launches
from the company. Recent ones, Fevicol Speedex (quick adhesive),
Fevicol Marine, Dr. Fixit Raincoat, are all doing well. The company
indicated that various launches are in the pipeline for FY13.
Valuation. We value the stock at a price target of `196 according to the
DCF-based valuation method. At our target, the stock would trade at a PE of
23x FY13e earnings. Risks: higher crude oil prices and delay in finalising the
elastomer project.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Pidilite Industries
4QFY12: Margin higher despite rising raw material prices; Buy
Pidilite reported strong results in 4QFY12. Its revenue and net profit
grew 14% and 43%, respectively. EBITDA margin increased 70bps
despite higher raw material prices. The company has not yet finalized
plans for the elastomer project. With various launches planned, we
expect steady growth in FY13 and retain a Buy, with a target of `196.
Healthy revenue growth. Pidilite grew revenues 14% yoy. In the past
four quarters, it has hiked prices 5-6%. 4QFY12 volume growth came in
at 8%-9%. Revenue in consumer and bazaar products grew 18.1% and in
industrial products 4%. Pidilite has indicated that it would further hike
prices, by end-Jun’12.
EBITDA margin improves, tax rate drops. The EBITDA margin
improved 70bps yoy, due to lower ‘other expenditure’ and despite higher
raw material prices. The impact of the rupee depreciation will be seen in
1HFY13. The effective tax rate was down 410bps and ‘other income’ was
up ~52%. This helped the company report 43% yoy net profit growth.
Status maintained on the elastomer project. The company mentioned
that the status of the elastomer project has been unchanged and it has not
yet finalized plans regarding this project. However, it indicated that there
are no further investments in this project apart from some expenses to
keep the plant in running condition.
Product launches continue. There has been a steady flow of launches
from the company. Recent ones, Fevicol Speedex (quick adhesive),
Fevicol Marine, Dr. Fixit Raincoat, are all doing well. The company
indicated that various launches are in the pipeline for FY13.
Valuation. We value the stock at a price target of `196 according to the
DCF-based valuation method. At our target, the stock would trade at a PE of
23x FY13e earnings. Risks: higher crude oil prices and delay in finalising the
elastomer project.
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